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Principles of Information Systems, Tenth Edition


Title: Principles of Information Systems, Ninth Edition Last modified by: Andy Smith Created Date: 11/22/2002 3:56:32 PM Document presentation format – PowerPoint PPT presentation

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Title: Principles of Information Systems, Tenth Edition

Principles of Information Systems, Tenth Edition
  • Chapter 9
  • Enterprise Systems

Principles and Learning Objectives
  • An organization must have information systems
    that support routine, day-to-day activities and
    that help a company add value to its products and
  • Identify the basic activities and business
    objectives common to all transaction processing
  • Describe the transaction processing systems
    associated with the order processing, purchasing,
    and accounting business functions

Principles and Learning Objectives (continued)
  • A company that implements an enterprise resource
    planning system is creating a highly integrated
    set of systems, which can lead to many business
  • Discuss the advantages and disadvantages
    associated with the implementation of an
    enterprise resource planning system
  • Identify the challenges that multinational
    corporations face in planning, building, and
    operating their enterprise systems

Why Learn About Enterprise Systems?
  • In our service-oriented economy
  • Outstanding customer service has become a goal of
    virtually all companies
  • Effective use of enterprise systems
  • Will be essential to raise the productivity of
    your firm, improve customer service, and enable
    better decision making

An Overview of Transaction Processing Systems
  • Transaction processing systems (TPSs)
  • Capture and process detailed data necessary to
    update records about fundamental business
  • Include order entry, inventory control, payroll,
    accounts payable, accounts receivable, general
    ledger, etc.
  • Provide valuable input to
  • Management information systems, decision support
    systems, and knowledge management systems

An Overview of Transaction Processing Systems
Traditional Transaction Processing Methods and
  • Batch processing system
  • Data processing in which business transactions
  • Accumulated over a period of time
  • Prepared for processing as a single unit or batch
  • Online transaction processing (OLTP)
  • Data processing in which each transaction is
    processed immediately

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Traditional Transaction Processing Methods and
Objectives (continued)
  • Organizations expect their TPSs to
  • Capture, process, and update databases of
    business data
  • Ensure that the data is processed accurately and
  • Avoid processing fraudulent transactions
  • Produce timely user responses and reports
  • Reduce clerical and other labor requirements
  • Help improve customer service
  • Achieve competitive advantage

Traditional Transaction Processing Methods and
Objectives (continued)
  • A TPS typically includes the following types of
  • Order processing systems
  • Accounting systems
  • Purchasing systems

Traditional Transaction Processing Methods and
Objectives (continued)
Transaction Processing Systems for Small and
Medium-Size Enterprises (SMEs)
  • Many software packages
  • Provide integrated transaction processing system
    solutions for small and medium-size enterprises
  • Camp Logan Cement
  • Was able to get up and running in a month with
    Intuit Enterprise Solutions

Transaction Processing Systems for SMEs
Transaction Processing Activities
  • TPSs
  • Capture and process data that describes
    fundamental business transactions
  • Update databases
  • Produce a variety of reports
  • Transaction processing cycle
  • The process of data collection, data editing,
    data correction, data manipulation, data storage,
    and document production

Transaction Processing Activities (continued)
Data Collection
  • Capturing and gathering all data necessary to
    complete the processing of transactions
  • Data collection can be
  • Manual
  • Automated via special input devices
  • Data should be
  • Collected at source
  • Recorded accurately, in a timely fashion

Data Collection (continued)
Data Editing
  • Checking data for validity and completeness to
    detect any problems
  • Examples
  • Quantity and cost data must be numeric
  • Names must be alphabetic

Data Correction
  • Reentering data that was not typed or scanned
  • Error messages must specify the problem so proper
    corrections can be made

Data Manipulation
  • Performing calculations and other data
    transformations related to business transactions
  • Can include
  • Classifying data
  • Sorting data into categories
  • Performing calculations
  • Summarizing results
  • Storing data in the organizations database for
    further processing

Data Storage
  • Updating one or more databases with new
  • After being updated, this data can be further
    processed and manipulated by other systems

Document Production and Reports
  • Generating output records, documents, and
  • Hard-copy paper reports
  • Displays on computer screens
  • Results from one TPS can be inputs to another

Enterprise Resource Planning and Customer
Relationship Management
  • Enterprise resource planning (ERP)
  • Set of integrated programs that manage a
    companys vital business operations for an entire
  • Business process
  • Set of coordinated and related activities that
    takes one or more kinds of input and creates an
    output of value to the customer of that process

Enterprise Resource Planning and Customer
Relationship Management (continued)
An Overview of Enterprise Resource Planning
  • ERP systems
  • Evolved from materials requirement planning
    systems (MRP) developed in the 1970s
  • Large organizations
  • The first to take on the challenge of
    implementing ERP

Advantages of ERP
  • Improved access to data for operational decision
  • Elimination of costly, inflexible legacy systems
  • Improvement of work processes
  • Upgrade of technology infrastructure

Disadvantages of ERP Systems
  • Expense and time in implementation
  • Difficulty implementing change
  • Difficulty integrating with other systems
  • Difficulty in loading data into new ERP system
  • Risks in using one vendor
  • Risk of implementation failure

Leading ERP Systems
  • No one ERP software solution from a single vendor
    is best for all organizations
  • SAP
  • Largest and most-recognized ERP solution provider
    among Fortune 1000 and Global 5000 organizations
  • Microsoft and SAP
  • Partnered in the development of Duet

ERP for Small and Medium-Size Enterprises (SMEs)
  • Many SMEs elect to implement open-source ERP
  • Reasons for customization
  • Customization is needed for your other business
    systems to work with the ERP package
  • You need additional data fields and/or different
    field sizes than what comes with the standard
  • Customization is needed to meet regulatory

Supply Chain Management (SCM)
  • A system that includes
  • Planning, executing, and controlling all
    activities involved in raw material sourcing and
  • Converting raw materials to finished products,
    and warehousing and delivering finished product
    to customers

Supply Chain Management (SCM) (continued)
  • Process for developing a production plan
  • Sales forecasting
  • Sales and operations plan (SOP)
  • Demand management
  • Detailed scheduling
  • Materials requirement planning (MRP)
  • Purchasing
  • Production
  • Sales ordering

Financial and Managerial Accounting and ERP
  • ERP systems
  • Do not work directly with production machines, so
    they need a way to capture information about what
    was produced
  • Retailers as well as manufacturers
  • Use demand forecasting to match production to
    consumer demand and to allocate products to stores

Financial and Managerial Accounting and ERP
  • General ledger
  • Main accounting record of a business
  • ERP system
  • Captures transactions entered by workers in all
    functional areas of the business
  • Creates associated general ledger record to track
    the financial impact of the transaction

Financial and Managerial Accounting and ERP
  • Financial accounting
  • Captures and records all transactions that affect
    a companys financial state
  • Uses these documented transactions to prepare
    financial statements to external decision makers
  • Managerial accounting
  • Provides data to enable the firms managers to
    make decisions about current and future operations

Business Intelligence and ERP
  • Business intelligence (BI)
  • Gathering enough of the right information to
    shine a spotlight on the organizations
  • Essential component of an organizations ERP
  • BI tools are used to
  • Access all the operational data captured in the
    ERP database, analyze performance on a daily
  • Highlight areas for improvement, and monitor the
    results of business strategies

Customer Relationship Management
  • Goal is to understand and anticipate the needs of
    current and potential customers
  • Used primarily by people in
  • The sales, marketing, and service organizations
    to capture and view data about customers and to
    improve communications
  • CRM software
  • Automates and integrates the functions of sales,
    marketing, and service in an organization

Customer Relationship Management (continued)
Customer Relationship Management (continued)
  • Key features of a CRM system
  • Contact management
  • Sales management
  • Customer support
  • Marketing automation
  • Analysis
  • Social networking
  • Access by smartphones
  • Import contact data

Customer Relationship Management (continued)
Hosted Software Model for Enterprise Software
  • Many business application software vendors
  • Are pushing the use of the hosted software model
    for SMEs
  • Using the hosted software model
  • Means the small business firm does not need to
    employ a full-time IT person to maintain key
    business applications

Hosted Software Model for Enterprise Software
International Issues Associated with Enterprise
  • Challenges that must be met by an enterprise
    system of a multinational company include
  • Different languages and cultures
  • Disparities in IS infrastructure
  • Varying laws and customs rules
  • Multiple currencies

Different Languages and Cultures
  • In some cultures, people do not routinely work in
    teams in a networked environment
  • Multinational companies
  • Can establish close connections with their
    business partners
  • Roll out standard IS applications for all to use

Disparities in Information System Infrastructure
  • Lack of a robust or a common information
    infrastructure can create problems
  • Many countries telecommunications services are
    controlled by a central government or operated as
    a monopoly
  • No incentives to provide fast and inexpensive
    customer service

Varying Laws and Customs Rules
  • Numerous laws can affect collection and
    dissemination of data
  • Examples
  • Labor laws in some countries prohibit recording
    of worker performance data
  • Some countries have laws limiting the
    trans-border flow of data linked to individuals
  • Trade custom rules between nations
  • North American Free Trade Agreement (NAFTA)

Multiple Currencies
  • Enterprise system of multinational companies must
    conduct transactions in multiple currencies
  • Systems must
  • Be current with foreign currency exchange rates
  • Handle reporting and other transactions
  • Issue vendor payments and customer statements
  • Record retail store payments
  • Generate financial reports in the currency of

  • Transaction processing systems (TPSs)
  • Are at the heart of most information systems in
    businesses today
  • Batch and online processing
  • The collection of transactions into batches
  • TPSs perform the following basic activities
  • Data collection, data editing, data correction
  • Data manipulation, data storage, document

Summary (continued)
  • Enterprise resource planning (ERP)
  • Software that supports the efficient operation of
    business processes
  • Most firms use ERP systems to
  • Support financial and managerial accounting and
    business intelligence
  • Organizations are implementing CRM systems to
    manage all aspects of customer encounters
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